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Eldridge v. Cabela's Inc.

United States District Court, W.D. Kentucky, Louisville Division

September 28, 2017

FRANKLIN ELDRIDGE, individually and on behalf of all others similarly situated, Plaintiffs,
v.
CABELA'S INCORPORATED, Defendant.

          MEMORANDUM OPINION AND ORDER

          DAVID J. HALE, JUDGE UNITED STATES DISTRICT COURT.

         Plaintiff Franklin Eldridge brings this suit under the Telephone Consumer Protection Act of 1991, alleging that Defendant Cabela's Incorporated, through its wholly owned subsidiary World's Foremost Bank, placed telephone calls using an automatic telephone dialing system and/or artificial or prerecorded voice to cellular telephones of consumers nationwide, without the consumers' prior express consent. (Docket No. 1) Cabela's moved to stay the proceedings pending the outcome of a case currently before the United States Court of Appeals for the D.C. Circuit, ACA International v. Federal Communication Commission, No. 15-1211 (D.C. Cir.). (D.N. 19) Cabela's has also moved to dismiss the complaint for failure to state a claim and to strike three of the four classes identified in Eldridge's complaint. (D.N. 20) For the reasons set forth below, the motion to stay and motion to dismiss will be denied. The motion to strike will be granted in part and denied in part, and Eldridge will be given leave to file an amended complaint.

         I. Background

         The following facts are set out in the complaint and accepted as true for purposes of the present motions. See Tackett v. M & G Polymers, USA, LLC, 561 F.3d 478, 488 (6th Cir. 2009) (citing Gunasekera v. Irwin, 551 F.3d 461, 466 (6th Cir. 2009) (citations omitted)).

         Cabela's is a specialty retailer and a direct marketer of hunting, fishing, camping, and related outdoor merchandise. (D.N. 1, PageID # 4) According to Eldridge's complaint, World's Foremost Bank (WFB) is a wholly owned subsidiary of Cabela's tasked with issuing and managing the Cabela's CLUB Visa credit card, a rewards-based card program. (Id.) During 2015, Cabela's maintained approximately 1.9 million active credit-card accounts. (Id.) When consumers sign up for a Cabela's CLUB Visa credit card issued by WFB, they are presented with disclosures that make it clear that “WFB, its affiliates and agents . . . ha[ve] express consent to contact you at any telephone number you provide to WFB.” (Id.)

         In or around February 2016, Eldridge obtained a new cellular telephone number from Cricket Wireless. (Id., PageID # 10) Shortly thereafter, he began receiving autodialed and prerecorded calls to his cellular telephone number from Cabela's, all seeking to collect an outstanding debt allegedly owed by the prior owner of Eldridge's cellular telephone number. (D.N. 1, PageID # 10) Eldridge is not a Cabela's customer and never provided his consent for Cabela's to contact him. (Id., PageID # 11) Furthermore, starting in February 2016, Eldridge repeatedly asked Cabela's to stop calling him, but Cabela's continued to place autodialed and prerecorded calls to Eldridge. (Id., PageID # 12)

         Eldridge brings this action pursuant to Federal Rule of Civil Procedure 23(b)(2) and 23(b)(3) on behalf of himself and members of four putative classes: (1) an “Autodialed No Consent Class, ” consisting of persons whom Cabela's called using an automatic telephone dialing system (ATDS) without their prior consent; (2) a “Pre-recorded No Consent Class, ” consisting of persons whom Cabela's called using a prerecorded voice without their prior consent; (3) an “Autodialed Stop Class, ” consisting of persons whom Cabela's called using an ATDS after such persons had informed Cabela's that they no longer wished to receive calls from Cabela's; and (4) a “Pre-recorded Stop Class, ” consisting of persons whom Cabela's called using a prerecorded voice after such persons had informed Cabela's that they no longer wished to receive calls from Cabela's. (Id., PageID # 12-13) Eldridge seeks an injunction requiring Cabela's to cease placing autodialed and prerecorded calls to cellular telephones without the express consent of the recipients and preventing similar conduct by Cabela's in the future, as well as an award of statutory damages to the members of the putative classes. (Id., PageID # 3)

         Eldridge's claims arise under the Telephone Consumer Protection Act (the TCPA), 47 U.S.C. § 227. The TCPA allows a recipient of an unsolicited call to bring suit and recover damages (including statutory damages) against the maker of that call under certain circumstances. Specifically, the TCPA makes it unlawful “to make any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing system or an artificial or prerecorded voice . . . to any . . . cellular telephone service.” 47 U.S.C. § 227(b)(1)(A)(iii). Regarding the “prior express consent” exception, the Federal Communications Commission (FCC) has ruled that once given, consent may be revoked “at any time and through any reasonable means.In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, Declaratory Ruling and Order, 30 FCC Rcd. 7961 at ¶ 47 (rel. July 10, 2015).

         Eldridge alleges that Cabela's has violated the TCPA because members of the putative classes did not expressly consent to receiving calls from Cabela's. (D.N. 1, PageID # 5) Indeed, many class members have no history with Cabela's and have allegedly received such calls from the company only because of a practice known as “recycling.” “Recycling” is the process by which cellular telephone carriers reassign relinquished cellular telephone numbers to other subscribers. (Id., PageID # 6) Eldridge alleges that in such instances, Cabela's simply treats the new cellular number owner as if he or she were the previous owner. (Id.)

         Cabela's moved to stay these proceedings pending the outcome of a case currently before the United States Court of Appeals for the D.C. Circuit, ACA International v. Federal Communication Commission, No. 15-1211 (D.C. Cir.). (D.N. 19) Cabela's has also moved to dismiss Eldridge's complaint and to strike three of the four putative classes described in the complaint: the two so-called “Stop” classes and the first of the two “No Consent” classes. (D.N. 20-1, PageID # 132).

         II. Motion to Stay

         In support of its motion to stay, Cabela's argues that the resolution of ACA Int'l “may moot Plaintiff's claims in their entirety, or have a significant effect on the scope and extent of discovery.” (D.N. 19-1, PageID # 87) The Court disagrees. For the reasons set forth below, Cabela's motion to stay will be denied.

         On July 10, 2015, the FCC issued a ruling clarifying certain terms and provisions of the TCPA. See In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, Declaratory Ruling and Order, 30 FCC Rcd 7961 (rel. Jul. 10, 2015) (“2015 Order”). The FCC held that the term “called party” means the current “subscriber and customary user” of a wireless telephone number rather than the “intended recipient.” Id. ¶¶ 71-84. The FCC also concluded that where a number has been recycled to a new subscriber, liability under the TCPA may accrue starting with the second call to the recycled number regardless of whether the caller knows that the cellular number has been assigned to a new subscriber. Id. ¶ 82. Additionally, the FCC took the position that any equipment that is capable of being modified to generate random or sequential telephone numbers constitutes an ATDS. Id. ¶¶ 15-20. Following the ruling, petitions were filed in the United States Court of Appeals for the D.C. Circuit seeking review of the Order. The petitioners challenge the three major findings of the Order. See Joint Petitioner Final Brief at 4, ACA Int'l, No. 15-1211 (D.C. Cir. Feb. 24, 2016). Briefing in ACA Int'l was completed in February 2016, and oral argument was held on October 19, 2016.

         A. Legal Standard

         A trial court has broad discretion to stay all proceedings pending the resolution of independent proceedings elsewhere. Landis v. N. Am. Co., 299 U.S. 248, 254 (1936). Such power is incidental to the power inherent in every court to control the disposition of the cases on its docket. Clinton v. Jones, 520 U.S. 681, 706-07 (1997) (citing Landis, 299 U.S. at 254). “While there is no precise test for determining whether to issue a stay, the Court considers the balance of the hardships, the potential harm to the public, and judicial economy and efficiency.” Caudill v. Wells Fargo Home Mortg., Inc., No. CV 5:16-066-DCR, 2016 WL 3820195, at *2 (E.D. Ky. July 11, 2016) (citing IBEW, Local 2020 v. AT&T Network Sys., No. 88-3895, 1989 WL 78212, at *8 (6th Cir. July 17, 1989)). “The most important consideration is the balance of hardships; the moving party has the burden of proving that it will suffer irreparable injury if the case moves forward, and that the non-moving party will not be injured by a stay.” IBEW, Local 2020, 1989 WL 78212, at *8 (citing Landis, 299 U.S. at 255); see also F.T.C. v. E.M.A. Nationwide, Inc., 767 F.3d 611, 628 (6th Cir. 2014) (“The most important factor is the balance of the hardships.”) (citing IBEW, Local 2020, 1989 WL 78212, at *8). Additionally, a stay should not be for an “indefinite duration in the absence of pressing need.” Landis, 299 U.S. at 255. “A court must tread carefully in granting a stay of proceedings, since a party has a right to a determination of its rights and liability without undue delay.” Ohio Envtl. Council v. U.S. Dist. Court., S. Dist. of Ohio, E. Div., 565 F.2d 393, 396 (6th Cir. 1977).

         B. Balance of Hardships

         Cabela's argues that a stay is appropriate in this case because (1) the issues to be resolved in ACA Int'l by the D.C. Circuit may guide the Court's disposition of this case, simplify the issues, and promote judicial economy; (2) a decision in ACA Int'l is expected shortly, so the stay would likely not cause excessive delay; (3) Eldridge has not demonstrated how he would be prejudiced by a stay of the proceedings; and (4) proceeding with discovery will cause undue harm and waste resources. (D.N. 19-1, PageID # 88; D.N. 24, PageID # 220) Concerning the balance of hardships specifically, Cabela's claims that “Plaintiff will not be prejudiced by the stay pending the outcome of the ACA Case where, as here, the stay is only expected to last a matter of months at most.” (D.N. 19-1, PageID # 94)

         Yet as Eldridge notes in his response, ACA Int'l has been fully briefed since February 2016, and oral argument was held on October 19, 2016. (D.N. 21, PageID # 153) Contrary to Cabela's assertion that “a decision is expected by the end of 2016, ” the time that the D.C. Circuit will issue its opinion in ACA Int'l is entirely unclear; as of the date of this Opinion, the case remains pending. See Lathrop v. Uber Techs., Inc., 2016 WL 97511, at *4 (N.D. Cal. Jan. 8, 2016) (denying motion to stay pending ACA Int'l in part because “neither the parties nor the Court can forecast when the D.C. Circuit will ultimately issue a decision”). Furthermore, the D.C. Circuit is unlikely to be the final step in the litigation. “Whichever party is unsuccessful in that court is almost certain to appeal to the Supreme Court.” Id. In any event, Cabela's has misstated the applicable burden. It is not Eldridge who must show prejudice, but rather Cabela's who must prove that Eldridge will not be injured by a stay. IBEW, Local 2020, 1989 WL 78212, at *8. Because Cabela's has failed to refute that further delay will hinder Eldridge's ability to reach class members or increase the risk that evidence will dissipate (D.N. 21, PageID # 155), the Court finds that further delay will likely prejudice Eldridge.

         Next, Cabela's argues that without a stay, it “will be forced to go through with discovery that may become moot if some (or all) claims in this matter are resolved following the ACA Case decision.” (D.N. 24, PageID # 224) In Cabela's assessment, granting a stay will avoid “the expense and disruption of discovery and motion practice in a case that may not present any valid claims.” (D.N. 19-1, PageID # 95) The Court finds, however, that harm in the form of time and expense incurred to litigate a case is not sufficient to warrant the requested stay, particularly given the speculation concerning the length of the stay and the uncertainty over whether the ACA Int'l decision would be dispositive of this case (discussed infra).

         C. Judicial Economy and Efficiency

         Additionally, Cabela's argues that a stay is necessary to tailor the claims and defenses that remain after a ruling in ACA Int'l. (D.N. 24, PageID # 220) Cabela's cites eighteen federal TCPA cases in twelve jurisdictions that have been stayed based in whole or in part on the pending decision in ACA Int'l. (D.N. 19-1, PageID # 92-93) Many of the courts that did so based their rulings on ideas of judicial economy and efficiency. See, e.g., Errington v. Time Warner Cable, Inc., 2:15-CV-02196 RSWL (DTB), 2016 WL 2930696, at *4 (C.D. Cal. May 18, 2016) (“[G]ranting a stay may simplify the issues in this case and conserve judicial resources.”). Cabela's argues that ACA Int'l could be dispositive of two issues central to this case. First, Cabela's contends that if the D.C. Circuit holds that the statutory term “called party” means the expected recipient of the call, or that the safe-harbor provision extends beyond the first call, it will have a complete defense to Eldridge's claims. (D.N. 19-1, PageID # 95) Second, Cabela's argues that if the D.C. Circuit holds that the definition of ATDS should be limited to equipment with only the present capacity to generate random or sequential telephone numbers, it will have a partial defense to Eldridge's claims. (Id.)

         Yet most vexing for Cabela's position is its own use of probabilistic language: “[ACA Int'l] could be dispositive of this case . . . [ACA Int'l] could simplify the issues for discovery . . . without a stay, Cabela's will be forced to go through with discovery that may become moot [in light of ACA Int'l].” (D.N. 24, PageID # 224 (emphasis added)) Furthermore, as Eldridge notes, the calls at issue allegedly featured a prerecorded voice as well as an ATDS. (D.N. 21, PageID #156) As such, two of the proposed classes do not depend in any way on the use of an ATDS and thus will not be affected by this aspect of ACA Int'l. (Id.) Cabela's sole response to Eldridge's argument is that “[i]f Plaintiff intends on pursuing [these] claim[s], [they] can be resolved very quickly on a motion for summary judgment with limited or no discovery.” (D.N. 24, PageID # 221) Notwithstanding this confident assertion, the Court finds that Cabela's has not adequately addressed the concern that regardless of the D.C. Circuit's ruling, key issues will remain.

         Moreover, Cabela's fails to adequately address the fact that even following a published opinion in ACA Int'l, the Court may draw from various other appellate-court interpretations of the term “called party, ” at least until the FCC rules on the matter again. (D.N. 21, PageID # 156 (citing Leyse v. Bank of Am. Nat' Ass'n, 804 F.3d 316, 325 n.13 (3d Cir. 2015) (defining a “called party”); Osorio v. State Farm Bank, F.S.B., 746 F.3d 1242, 1251 (11th Cir. 2014) (same); Soppet v. Enhanced Recovery Co., LLC, 679 F.3d 637, 640-41 (7th Cir. 2012) (same); Meyer v. Portfolio Recovery Assocs., LLC, 707 F.3d 1036, 1043 (9th Cir. 2012) (same)))

         Ultimately, Cabela's cannot support its motion to stay on judicial-efficiency grounds alone, especially given that prejudice to the non-movant is the most important consideration. IBEW, Local 2020, 1989 WL 78212, at *8; see also Mancini v. JPMorgan Chase Bank, N.A., No. 1:15-cv-61524-UU, 2016 WL 1273185, at * 1 (S.D. Fla. Mar. 28, 2016) (“Any stay would be indefinite and solely in the interests of judicial economy, which the Supreme Court has found to be insufficient justification for a stay pending a similar proceeding.” (citing Landis, 299 ...


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